Global payment network UATP has announced a new partnership with AI-powered global payments network and shopping assistant Klarna.
The main scope of this partnership is to help airlines to provide Klarna’s flexible payment services, including interest-free Buy Now Pay Later (BNPL) options. The arrangement is designed to offer travellers more flexibility when purchasing travel-related products and services. In essence, the collaboration allows Klarna to tap into UATP’s existing network of airlines and travel agencies, particularly in the EU and APAC regions, where Klarna will become a preferred BNPL provider.
According to the company press release, Klarna sees significant opportunity in the air travel industry, a sector valued at USD 1 trillion, where credit cards currently dominate with 70% of retail travel payments. The same source reveals that airlines incur high costs in processing these payments, estimated at USD 20 billion annually, while consumers face steep interest payments on credit cards.
According to officials from UATP, providing BNPL services is very important for travel merchants aiming to offer customers payment flexibility and improve conversion rates. They also emphasised the importance of partnering with a trusted provider such as Klarna, known for offering a range of payment options including immediate payments, interest-free BNPL, and long-term financing.
Klarna’s BNPL service offers short-term, interest-free credit with no fees for timely payments. Each transaction is underwritten based on eligibility criteria, and Klarna maintains a 99% repayment rate globally. This structure provides consumers with predictable repayment options, avoiding the accumulation of interest charges.
Expanding BNPL in the travel industry
The collaboration leverages UATP’s established infrastructure and expertise in alternative payment methods, allowing airlines and travel merchants on the UATP network to adopt Klarna’s BNPL services more efficiently. This reduces the complexity of implementation and lowers transaction costs for merchants. Meanwhile, Klarna gains broader access to travel merchants, enhancing its presence in the travel sector.
Klarna officials highlighted the benefits of offering interest-free BNPL for travellers and noted that the agreement with UATP enables Klarna to bring these advantages to more airlines, capitalising on the travel industry’s growth potential. The partnership between UATP and Klarna is scheduled to be operational by the third quarter of 2024.
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